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Which option would you select if you had the chose of receiving $1 million dollars in...

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Finance

Which option would you select if you had the chose of receiving$1 million dollars in lottery or $100,00 a year over the next 10years. Current 10 year interest rates are at 5% and the current taxon lottery winnings is 40%. Explain!

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3.9 Ratings (475 Votes)
We have to calculate the present value of both the alternatives and check which alternative has higher present value First we will take the present value of 100000 a year over the next 10 years as per below After    See Answer
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Which option would you select if you had the chose of receiving$1 million dollars in lottery or $100,00 a year over the next 10years. Current 10 year interest rates are at 5% and the current taxon lottery winnings is 40%. Explain!

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